Dr. Reddy's Lab Key Ratios

The significant increase in ROE from 11.82% in 2021 to 21.76% in 2024 is primarily driven by an improvement in PAT margin, which nearly doubled, indicating enhanced profitability.Asset turnover has slightly fluctuated but remained consistent, suggesting that sales efficiency in utilizing assets has been stable, thus not hindering ROE growth.Leverage has decreased over the past four years, indicating a lower reliance on debt, which may alleviate financial risk, further benefiting shareholder returns.

The reduction in inventory days from 81.57 to 73.12 indicates improved management of stock, potentially reducing holding costs and freeing up cash.Receivable days initially increased to 103.01 before slightly dropping, suggesting issues in collecting receivables which could affect cash flow efficiency, yet the recent drop shows some improvement.The cash conversion cycle has improved significantly from 80.19 days in 2022 to 64.10 days in 2024, implying enhanced overall efficiency in working capital management.

ROE has significantly improved, driven by high profitability growth, particularly in the past two years, reflecting strong equity efficiency.ROCE also reflects a robust return, increasing in tandem with ROE, indicating efficient utilization of capital including debt financing.ROA has also seen improvement, showcasing stronger overall asset efficiency, which is crucial for sustainable long-term growth.